'Empathic Civilization': When Money No Longer Buys Happiness

by Richard Layard

Richard Layard has been on the staff of the London School of Economics (LSE) since 1964. Before that he taught in a comprehensive school and was the Senior Research Officer for the Robbins Committee on Higher Education. Layard was founder-director of LSE Centre for Economic Performance, a large research centre covering most areas of economic policy. Since 2000 he has been a member of the House of Lords as Baron Layard. Layard has written widely on unemployment, inflation, education, inequality and post-Communist reform. He was an early advocate of the welfare-to-work approach to unemployment, and co-authored the influential book Unemployment: Macroeconomic Performance and the Labour Market (Oxford University Press 1991). From 1997-2001 he helped implement these policies as a consultant to the Labour government. He was also involved in educational policy development for the non-graduate workforce. Recently, Layard has shifted his attention to the study of what has since come to be known as Happiness economics. This branch of economic analysis starts from the argument that income is a bad approximation for happiness. Based on modern happiness research, he cites three factors that economists fail to take into consideration: 1. Social comparisons: In contrast to what traditional economics predicts, happiness is derived from relative income as well as from absolute income. That is, if everyone gains purchasing power, some may still turn out unhappier if their position compared to others is worse. This effect may not turn economic growth into a zero sum game entirely, but it will likely diminish the benefits people draw from their hard work. In an economy where not only companies, but individuals are constantly forced to compete with each other, life and work are experienced as a rat race. 2. Adaptation: As people get used to higher income levels, their idea of a sufficient income grows with their income. If they fail to anticipate that effect, they will invest more time for work than is good for their happiness. 3. Changing Tastes: Economists assume that individual preferences are constant, when in fact such preferences are not fixed but increasingly mutable, shifting constantly according to the latest trends and cultural norms. In turn, the relative values of one's accumulated possessions are subject to depreciation, ultimately having a negative effect on happiness. Mental illness is probably the single greatest threat to a happy life, and for this reason Richard Layard is currently leading a campaign to provide within the NHS evidence-based psychological therapy for people with clinical depression and chronic anxiety disorder. The Depression Report, published in July 2006, is the manifesto for this campaign.

Competition is lonely. It is good to have it between organisations. Within organisations, though, it may or may not increase productivity, but it does not increase happiness. To extol it is to make a fundamental misjudgment about human nature.

For we are born with a strongly social side to our nature (a homo empathicus), as well as a profoundly selfish side. By the age of two many children will run and comfort another child who is hurt. We are wired up for fellow feeling -- when subjects in an experiment watch others put their hands in icy water, their own temperature falls.

We obtain pleasure from cooperation. When subjects in an experiment play the game of Prisoner's Dilemma, they can either cooperate or not with the other players. If they choose to cooperate, their brains light up in the standard areas that light up after other rewarding experiences. Immanuel Kant was simply wrong in saying that there can be no inner reward from doing the right thing. But the reward only results if the motivation was to do good -- you do not get the reward if your motivation was the reward.

So here is my picture of the good society. It is one where, as the Anglo-Saxon Enlightenment believed, there is the most happiness and the least misery. And we get there because every individual believes just that, and acts to promote it. Young people grow up aspiring to produce the most happiness they can in the world. And, because they do, others benefit and at the same time they themselves get the internal rewards from doing good. This is the empathic civilisation.

In such a society people feel that others are on their side -- rather than being a source of difficulty. How different from the society we have constructed in the last half century where individuals are increasingly in competition with each other. Forty years ago in the U.S. and Britain some 60% of individuals believed that "most other people can be trusted". Now it is nearer 30%. This is not surprising when we have so idolised personal success. The struggle for success is of course a zero-sum game -- you cannot increase the total amount of success since it is a relative concept. Instead we want a society where our main effort goes into positive-sum activities. These frequently involve cooperation and never involve deliberate effort to harm others.

But can we reverse the tide of history? I am sure we can. Cultural trends are not linear. There is already considerable disillusion with a society based mainly on the pursuit of wealth. As the surveys show, happiness has not grown in the last half century in Britain or the U.S. despite unparalleled growth in living standards. People increasingly realise that if happiness is to be increased it must be through an improvement in human relationships -- a growth of empathy. And this conviction is strengthened by the deplorable example of the finance industry, where the cultivation of selfishness almost brought down the world economy.

Where can we start in the building of empathy? Parents are vital but, if we are talking of a change in culture, the key instruments are the schools. Some are good at empathy, but many are not. There are many good examples, and all begin with an agreed set of values between teachers, students and parents -- based above all on mutual respect and responsibility. The school ethos is critical, as well as good evidence-based programmes in life skills. When the values of society go astray, it is generally the young who initiate change. But all age groups can contribute.

To promote a change in culture a group of people in Britain and the U.S. will shortly be founding a Movement for Happiness. This will promote the ideas I have been discussing -- as principles for how individuals should lead their own lives, and as guides for new priorities in social policy and workplace practice. We really could produce a happier and more harmonious society if we agreed that that was our top priority. Let's go for it.


Published with kind permission of the author. Originally published on the Huffington Post.

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